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Overage agreements and competing dispute resolution clauses

The High Court recently granted an urgent injunction restraining an expert determination in a case involving a housing association where there were competing dispute resolution clauses in relation to an overage agreement. Lara Kuehl analyses the judgment.

In a recent decision, Maypole Dock Ltd v Catalyst Housing Ltd [2021] EWHC 1742 (TCC), Jefford J granted an interim injunction to restrain a party from pursuing an expert determination in circumstances where there were competing dispute resolution clauses in the contract between the parties.

The dispute related to an Overage Agreement between the seller of a plot of development land (Maypole Dock Ltd, “Maypole”) and the purchaser, a housing association (Catalyst Housing Ltd, “Catalyst”).

The Overage Agreement contained obligations on the part of Catalyst to seek planning permission to optimise the “Open Market Value” (as defined) of the land and to pay Additional Consideration to Maypole on the obtaining of such planning permission. Planning permission for a residential development composed entirely of social housing was granted in August 2017 and the scheme was constructed by Catalyst. The costs of the development exceeded the projected revenue such that Open Market Value was negative and no consideration was payable to Maypole.

Maypole issued a claim in the High Court (TCC) alleging that Catalyst breached the Overage Agreement by failing to seek to optimise the Open Market Value of the land. Among other things, Maypole alleged that Catalyst moved social housing residents from another site to the land purchased from Maypole and then redeveloped the other site profitably, thus avoiding any Additional Consideration becoming payable under the Overage Agreement.

The Overage Agreement provided that the English courts had jurisdiction in relation to any dispute arising from the agreement. However, it also contained an expert determination clause allowing either party to refer to an independent surveyor a dispute “(other than in relation to OMV) relating to or arising out of the calculation of the Additional Consideration”.

Following service of the Court proceedings brought by Maypole, Catalyst served a notice of expert determination in relation to the same dispute. Maypole did not accept that the dispute fell within the expert determination clause and therefore did not agree that the expert had any jurisdiction.

However, Catalyst refused to agree to stay the expert determination and it was therefore likely that the expert would have reached a determination in respect of the dispute long before the Court. Maypole sought an urgent interim injunction from the High Court.

In granting the injunction, Jefford J commented that the Courts’ reluctance to interfere with adjudication, except in very rare circumstances, was informed by the statutory foundation of adjudication. Jefford J considered that the same principles did not apply to expert determination and that in this case there was a serious issue to be tried as to whether the expert had any jurisdiction at all. Jefford J noted that there was no issue that the Court had jurisdiction to determine whether or not the expert had jurisdiction. Jefford J also accepted that damages would not be an adequate remedy for Maypole if the expert determination were to proceed. The Court therefore decided that the balance of convenience was in favour of granting an interim injunction restraining Catalyst from pursuing the expert determination and granted the injunction sought.

Lara Kuehl is a barrister at Selborne Chambers. She represented Maypole, the successful applicant, instructed by Radcliffes LeBrasseur LLP.

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